Labadie v. Physician Network Corp. of Louisiana, Inc.

805 So. 2d 1278 | La. Ct. App. | 2002

Lead Opinion

J^DUFRESNE, Chief Judge.

This is an appeal by Physician Network Corporation of Louisiana and Tenet HealthSystem Hospitals, Inc. (collectively PNC), defendants-appellants, from a judgment ordering payment for unused vacation days, as well as attorney fees pursuant to La. R.S. 23:631 et seq., to Drs. Juan and Eugenio Labadie, two former contract employees of PNC. The Labadies have answered the appeal seeking penalties against defendants under the same statutes. For the following reasons we affirm the judgment as to the award for payment for unused vacation days. However, we vacate the award of attorney fees and remand that portion of the case to the district court for further proceedings in accordance with this opinion.

The underlying facts are not disputed. In 1995 the Labadies and their partner, Dr. Fernando Astilla, were engaged in a private obstetrics and gynecological medical practice. In January of that year they were approached by PNC in regard to employment by that corporation in a similar practice. A contract was eventually signed by the parties and the | ^doctors began their employment on July 1, 1995. After about five years the parties decided to terminate their relationship. All issues between them were concluded, except for the matter of payment for accrued days off. Both doctors filed separate suits seeking payment for these days, and the cases were consolidated for a bench trial. Dr. Astilla had ceased his association with PNC in 1996 and was not a party to the present action.

The dispute arises from two clauses in the employment contracts, which are as follows:

5. EMPLOYEE’S OBLIGATIONS

5.2 Medical Practice. Doctor shall engage in the practice of medicine and the care and treatment of patients as an employee of Corporation for a minimum of thirty-six (36) hours per week, subject to vacations, continuing medical education, conferences, and holidays discussed below (“Doctor’s Medical Practice”). Doctor shall schedule office hours, Monday and Thursday from 2:80 p.m. to 5 p.m.; Tuesday and Wednesday from 9:30 a.m. to 12 p.m. and 1:30 p.m. to 5 p.m.; and Friday 9:30 a.m. to 4 p.m., if on weekend call. Doctor shall schedule surgeries on Monday and Thursday morning. In addition to Doctor’s scheduled office and hospital hours, Doctor shall also be available to provide on-call coverage as requested from time to time by the Corporation. As used herein, the term “on-call coverage” shall mean Doctor’s availability on the premises or by telephone at the assigned designated hospitals within thirty (30) minutes of call. Doctor shall only be responsible for call coverage for physicians practicing at the same locations as Doctor. Doctor shall accrue one day off after each call period. During the term of this Agreement and any extensions thereof unless sooner terminated as provided for herein, Doctor shall not enter into any other physician employment contract similar to this Agreement, or otherwise engage in the practice of medicine, directly or indirectly, except as Corporation’s employees as provided by this Agreement.

8. EMPLOYEE’S BENEFITS

8.2.2 Doctor shall accrue thirty-one (31) paid days for vacation, holiday and sick leave per year. Vacation, holiday and sick leave benefits begin to accrue on the first day of employment.

During the course of the contract the doctors were each on call about 90 times per year and it is not disputed that under Section 5.2 of the Lcontract they were entitled to the same number of days off. The parties also agreed that the doctors did not take most of these days off. It was further stipulated that if these days were found to be accrued vacation time for which payment was due, then the amounts to which the doctors were respectively entitled were $386,351.20 for Juan, and $374,101.04 for Eugenio.

At trial both parties presented evidence bearing on how the two above clauses in the contract came into being, and what their respective understandings were in agreeing to those terms. Based on the wording of the contract as well as on this extrinsic evidence, the trial judge determined that the days off were in fact paid days that accumulated if not used. He therefore awarded the plaintiff doctors the above sums, with interest from date of demand. He also awarded attorney fees of 25% of the base amounts pursuant to La. R.S. 23:632, which provides for such fees. He denied, however, plaintiffs’ demand for penalties on grounds that there was a legitimate dispute as to whether the days off had accumulated. PNC now appeals the awards for payment for the days off and attorney fees. The doctors have answered the appeal asserting that penalties should have been assessed.

The pertinent statutes here are La. R.S. 23:631 et seq. regarding payment of wages at the termination of employment. In interpreting these statutes this court has repeatedly held that unused vacation pay is considered wages for purposes of the statutes unless the employer’s established policies preclude such payments, Huddleston v. Dillard Department Stores, Inc., 94-53 (La.App. 5th Cir.5/31/94), 638 So.2d 383. Here, there is no serious argument that PNC has a policy against paying | ¿for unused vacation time at the end of employment contracts. Therefore, if the days off provided in Sec. 5.2 are considered as paid vacation days which accumulated then they are also wages which must be timely paid pursuant to the statutes.

In his reasons for judgment the trial judge summarized PNC’s position as being that “the day off following a call period was to be used immediately or else forfeited.” He rejected this proposition because in his judgment extrinsic evidence concerning the negotiations leading up to inclusion of the “day off’ clause led to the opposite conclusion. That evidence was as follows.

It was agreed that the “day off’ clause did not appear in the contract originally proposed by PNC and that the only provision for vacation time in that document was the 31 day period of Sec. 8.2.2. Dr. Juan Labadie testified that he was interested in more days off and brought that to the attention of Mr. Richard Rauh, the contract representative of PNC. Rauh informed him that PNC’s standard contract only provided for 31 days of vacation and that that clause could not be altered. Instead, the parties agreed to provide for more time off by inserting the “days off’ clause in Sec. 5.2.

In construing Sec. 5.2, the trial judge stated:

The gist of defendants’ position is that the day off following a call period was to be used immediately or else forfeited. It could not be carried over, used on a subsequent day other than immediately following the call period, saved, or otherwise accumulated.

The Court finds it rather difficult to believe that this was in fact the intent which the defendants had in mind at the time the contract was entered into. The specific language included, and reviewed by the defendants’ lawyer, was that “the doctor shall accrue [emphasis added] one day off after each call period,” The language in this provision in no way suggests or otherwise implies that the off day IfiWas, or had, to be used immediately following the call period or otherwise forfeited. To the contrary, the use of the term accrue implies that these days could be carried over, accumulated, and used at times other than the day which immediately followed the call period.

Based on this analysis of the evidence, he concluded that the “days off’ were paid days that accumulated, and he ordered payment for them. We find no error in this conclusion, and therefore affirm it.

PNC urges here that it was legal error to interpret the contract as providing the doctors with 120 days of paid vacation time per year. Alternatively, it argues that such a result is absurd. While we admit that this arrangement is at first glance unusual, the contract nonetheless so provides. Section 5.2 states unambiguously that the doctors are to “accrue” one day off for each on call period. It was stipulated that there were some 90 call periods in a year thus providing 90 days off. Richard Rauh, testifying on behalf of PNC, said that so long as the 36 hours per week requirement was met the days off would be paid days.

The only other issue to be resolved was whether the days off accumulated if not used. The trial judge relied on the word accrue, as meaning that the days would accumulate. Although not noted by the trial judge, accrue is used twice in the relatively short Sec. 8.2.2 in reference to accumulating vacation time. Considering all of these circumstances, we can only conclude that PNC negotiated a contract which by its specific terms provided that the doctors would accumulate some 120 days of paid vacation per year. While those terms may have been unfavorable for PNC, we do not consider them to be absurd.

PNC next asserts that the trial judge erred in excluding testimony by Robert Katz, offered by it as an expert in “physician practice management [ Band physician employment contracts.” It proffered his testimony, which it represents as directed to customary contractual terms in the physician employment field. Mr. Katz stated on preliminary examination that there were no fields of expertise known to him as “physician practice management” or “physician employment contracts.” He also said that there were no professional schools or courses in such areas, and that he had no degrees as such. He also stated that he was a CPA who advised doctors about employment contracts, and specifically fringe benefits.

The trial judge noted that Mr. Katz’s explanation of what he does in the field was directed to numerical analyses of contracts, which are then turned over to attorneys for final review. He concluded that Mr. Katz was not an expert in the interpretation of such contracts and so refused to admit him as an expert in the case. Trial judges are given discretion in the admission or exclusion of experts, and their rulings will not be disturbed absent an abuse of that discretion, Merlin v. Fuselier Construction, Inc., 00-1862 (La. App. 5th Cir.5/30/1), 789 So.2d 710. In the circumstances of the present case we find no abuse of the trial court’s discretion in refusing to admit Mr. Katz as an expert in the areas in which he was offered.

PNC next argues that were the off days found to be compensable, the three year prescriptive period for unpaid wages of La. Civ.Code, Art. 3494 would preclude payment for the first two years of vacation time of the five year contract. Article 3495 provides that the prescriptive period of Art. 3494 commences to run from the day payment is exigible and accrues as to past due wages even if the labor continues.

Thus, the question here, which to our knowledge is res nova, is when does payment for unused vacation time becomes exigible. The doctors Largue that because accumulated vacation time may be taken while the wage earner is still employed, any demand for payment for that time prior to termination of employment would be premature. It is only when the wage-earner leaves the job that he is entitled to payment for unused vacation, and that is when prescription commences as to that obligation. We hold that this is the proper interpretation of Art. 3495. To rule otherwise would be, in effect, to preclude the accumulation of vacation time beyond three years, and this we decline to do.

The last issue raised by PNC concerns the award of attorney fees. Under La. R.S. 23:632, when a wage-earner prevails in a suit for unpaid wages, “reasonable attorney fees shall be allowed.” PNC’s basic contention is that the trial judge erred in not compelling the doctors’ attorneys to produce time sheets, or at least some evidence as to the amount of time spent on the case.

In Rivet v. State, Dept. of Trans, and Dev., 96-0145 (La.9/5/96), 680 So.2d 1154, the court set forth a number of factors to be considered in determining whether a fee is reasonable or not. In that case the trial judge had awarded a percentage fee, apparently based on his consideration of the record and his knowledge of the case. In setting aside this award and remanding for further proceedings, the court stated that there was no evidence of record to substantiate the amount of time actually expended by the attorney in the case. While Rivet involved an interpretation of the clause “reasonable attorney fees actually incurred” as used in La. R.S. 13:5111(A) relating to appropriation suits, the court also noted that the time and labor involved is a major consideration in assessing the reasonableness of fees in any case.

| sWhile such an inquiry might be less important where the issue is the fee to be paid under a contingency fee contract with a party’s own attorney, where as here the fee is to be paid by the opposing party such an inquiry should be undertaken. We therefore set aside the attorney fee awards in this case and remand the matter to the district court to receive evidence showing the amount of time and labor required of plaintiffs’ counsel in the case, and then to fix a fee based upon that factor as well as the other factors enumerated in Rivet.

The final matter here is the doctors’ answer to the appeal in which they seek imposition of penalties pursuant to La. R.S. 23:632. It is a well established rule that penalty wages will not be assessed against an employer unless its actions are arbitrary and unreasonable; where there is a bona fide dispute the courts will not impose such penalties, See Boudreaux v. Hydraulic Rebuilders, 98-126 (La.App. 5th Cir.5/27/98), 713 So.2d 1148. Here, the trial judge found that there was a bona fide dispute and we agree with that determination. We therefore affirm the denial of the doctors’ claim for penalties.

For the foregoing reasons the judgment of the trial court is hereby affirmed as to the award for payment for days off. The award of attorney fees is set aside and the case is remanded to the district court for further proceedings consistent with this opinion.

AFFIRMED IN PART, VACATED IN PART AND REMANDED.

DALEY, J., dissents with reasons.

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Dissenting Opinion

| ¡DALEY, J.,

dissenting with reasons.

I respectfully dissent from the majority opinion.

This award has the absurd effect of PNC being forced to give the Labadies more than 20 weeks of paid vacation per year, in addition to their salaries and bonuses, which is contrary to the Agreement or any custom in the physician employment arena.

The threshold issue is how are on-call days off to be characterized? As the majority opinion states, the contractual dispute arises from two clauses in the employment contract: Section 5.2, which obligates the Doctors to be available for “on-call coverage” and provides that Doctors “shall accrue one day off after each call period.” Section 8.2.2 provides that the Doctors, “shall accrue thirty-one (31) paid days for vacation, holiday and sick leave per year.”

I find the contract is not clear regarding whether Dr. Eugenio Labadie and Dr. Juan Labadie were to be paid for accumulated days off due to call duty; therefore, standard rules of contract interpretation must be applied to decide the application of the contract language to the dispute between the parties. A contract should not be interpreted in an unreasonable or a strained manner so as to enlarge or to restrict its provisions beyond what is reasonably contemplated by its terms or so as to achieve and absurd conclusion.¹ When the words of a contract are clear and explicit and lead |2to no absurd consequences, no further interpretation may be made in search of the parties’ intent. LSA-C.C. art. 2046. Only when the agreement is unclear, ambiguous, or will lead to absurd consequences, should a court go beyond the written agreement to gather the parties’ true intentions.²

PNC argues that Section 5.2 of the contract cannot be construed to create additional paid vacation days when considered in light of Section 8.2.2, which expressly provides for a limited number of paid vacation days per year. The Labadies argue that they requested additional vacation days when they negotiated their contract and that the accrued call days off provision of the contract was a method of giving them more vacation time without interfering with PNC’s standard policy of 31 paid days of vacation per year.

The fact that the Agreement used the word “accrue” when discussing call days off, suggests that these days could in fact be “banked” and did not have to be used immediately following a night of difficult call, but the contract is silent as to whether call days would be paid vacation days. The fact that a minimum of thirty-six hours of work per week was required under the contract suggests that if the doctor worked extra hours, while on call, he could take additional days off to compensate for call hours worked, similar to comp time. The ability to take days off as a result of on-call duty does not automatically create extra paid vacation days. The testimony in the record establishes that there was never any discussion about whether the call days off would result in additional compensation.

The Labadies cite a group of cases that all stand for the proposition that vacation pay is considered wages. PNC does not disagree with this point, and points |sout that the Labadies must first prove that the parties “call days off’ were to be paid vacation days. The cases hold that if the parties agreed on paid vacation, or if it was the company policy that vacation days were paid, the paid vacation was to be considered wages and was therefore payable in the manner of wages, including the right to receive payment for unused vacation upon the end of employment.³ A Fifth Circuit case, Howser v. Carruth Mortgage Corp.⁴ held that a former employee was not entitled to compensation in lieu of vacation time not taken upon her resignation, where it was not the employer’s policy to compensate employees for vacation time not taken.

Contractual ambiguities must be construed in light of equity, usage, and the parties’ conduct. Louisiana Civil Code articles 2053 and 2054 provide:

A doubtful provision must be interpreted in light of the nature of the contract, equity, usages, the conduct of the parties before and after the formation of the contract, and of other contracts of a like nature between the same parties.

When the parties made no provision for a particular situation, it must be assumed that they intended to bind themselves not only to the express provisions of the contract, but also to whatever the law, equity, or usage regards as implied in a contract of that kind or necessary for the contract to achieve its purpose.

The trial court’s interpretation is inconsistent with substantially all of the relevant factors cited in Civil Code articles 2053 and 2054. LSA C.C. art. 2053 provides that “a doubtful provision must be interpreted in light of the nature of the contract, equity, usages, [and] the conduct of the parties before and after the formation of the contract....”⁵ When the employment contract does not express the | ¿parties’ intent as to the method of calculating certain benefits, parol evidence must be used to determine that intent.⁶ A good way to determine what parties to a contract intended is to look at the method in which the contract is performed, particularly if done consistently over and over again for a period of time.⁷

Mike Taylor testified that he started working with the Labadies in 1993 or 1994. He participated in the contract negotiations with PNC on behalf of the Labadies. He testified that he thought their contract with PNC/Tenet was very favorable to the doctors, especially considering the opportunity to make bonuses each year. He said there were no discussions at all, either way, about keeping track of vacation days and whether they could- be rolled over from year to year. There was no discussion if the call days were to be paid. Taylor testified that the call days off were for recuperation after a difficult night of call. He said there was no discussion about banking call days off and using them later down the road. He also said there was no discussion about getting paid for these unused days, one way or another.

Before he became an employee of PNC, Dr. Labadie took approximately 5-7 weeks of vacation per year, or between 25 and 35 working days per year. Dawn Ruiz, the Labadie’s office manager and former physician liaison with Meadowcrest Hospital, testified that before the Labadies became employed by PNC, they each only took between 5 and 6 weeks of vacation per year. Significantly this practice of taking between 25 and 35 vacation days per year did not change during the five years that both Doctors worked for the defendant.

IsThe trial court’s interpretation of the Agreement is contrary to the Labadies’ own past practice with respect to vacation, PNC’s practices, as well as generally accepted practices among physicians. Additionally, in this case, the trial judge applied the wrong burden of proof.

The trial judge stated in his reasons that the defendants presented no evidence that the “call” days off would be unpaid, so they would be considered paid vacation. It is plaintiffs’ burden, not defendant’s, to show that the call days would be paid. It is the Labadies’ burden of proof to show that call days off were to be considered vacation days, because only if they are considered vacation days, do the cases on paid vacation time apply. The Labadies testified that they interpret the employment contract to allow the conversion of the accumulated call days to vacation days. All other evidence, including the testimony of Mike Taylor, who assisted the Labadies in negotiating the contract, the past and current practice by both Doctors, as well as customary practice in the medical profession, dictates in favor of defendants interpretation. I, therefore, find the trial judge erred in requiring the defendant to prove that call days off would be unpaid. I find that the bulk of the evidence suggests that call days off would not result in additional compensation. Consequently, I would reverse.

1 . Ducote v. Koch Pipeline Co., L.P., 98-0942 (La. 1/20/99), 730 So.2d 432, Reynolds v. Select Properties, Ltd., 93-1480 (La.4/11/94), 634 So.2d 1180.

2 . State Dept. of Transp. And Development v. Unknown Owners, 27,150 (La.App. 2d Cir.9/27/95), 661 So.2d 626, writ denied, 95-2497 (La. 12/15/95), 664 So.2d 459.

3 . Beard v. Summit Institute, 707 So.2d 1233 (La.1998).

4 . 476 So.2d 830 (La.App. 5 Cir.1985).

5 . Amoco Production Co. v. Fina Oil & Chemical Co., 95-1185, p. 12-13 (La.App. 1st Cir.2/23/96), 670 So.2d 502, 511, writ denied, 96-1024 (La.5/31/96), 673 So.2d 1037.

6 . Liljeberg Enterprises, Inc. v. Lifemark Hospitals of La., Inc., 620 So.2d 1331, 1336 (La. App. 4th Cir.), writs denied, 621 So.2d 818 (La.f1993).

7 .Gamble v. D.W. [94-2423 La.App. 4th Cir. 16] & Associates, 509 So.2d 1041, 1043 (La. App. 3rd Cir.), writ denied, 514 So.2d 454 (La.1987).